1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 -------------------- FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of report (Date of earliest event reported): November 2, 2000 ---------------- CHARTER COMMUNICATIONS, INC. ---------------------------- (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) Delaware -------- (STATE OR OTHER JURISDICTION OF INCORPORATION OR ORGANIZATION) 000-27927 43-1857213 --------- ---------- (COMMISSION FILE NUMBER) (FEDERAL EMPLOYER IDENTIFICATION NUMBER) 12444 Powerscourt Drive - Suite 100 St. Louis, Missouri 63131 - ---------------------------------------------------- ----- (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE) (REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE) (314) 965-0555 --------------
2 ITEM 5. OTHER EVENTS. On November 2, 2000, Charter Communications, Inc. announced third quarter 2000 financial results. A copy of the press release is being filed as Exhibit 99.1 with this report.
3 ITEM 7. EXHIBITS. 99.1 Press release dated November 2, 2000.* - ---------------- *filed herewith
4 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. CHARTER COMMUNICATIONS, INC., registrant Dated November 2, 2000 By: /s/ KENT D. KALKWARF -------------------------------------------- Name: Kent D. Kalkwarf Title: Executive Vice President and Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)
5 EXHIBIT INDEX 99.1 Press release dated November 2, 2000.
1 EXHIBIT 99.1 NEWS [CHARTER COMMUNICATIONS LOGO] FOR RELEASE: 7:00 AM CENTRAL TIME, THURSDAY, NOVEMBER 2, 2000 CHARTER COMMUNICATIONS REPORTS CONTINUED REVENUE, OCF, AND CUSTOMER GROWTH IN THIRD QUARTER 2000 FINANCIAL RESULTS AGGRESSIVE DIGITAL VIDEO DEPLOYMENT CONTRIBUTES TO 20% OCF GROWTH ST. LOUIS -- Charter Communications, Inc. (Nasdaq: CHTR) today reported continued growth in revenues, operating cash flow (OCF), and basic, digital and data customers for the three months ended September 30, 2000, compared to pro forma year-ago results. THIRD QUARTER HIGHLIGHTS Pro forma revenues increased 13.9% to $842.9 million and pro forma operating cash flow increased 20.2% to $400.6 million for the third quarter of 2000 compared to the pro forma results for the third quarter of 1999. Charter added over 55,000 basic cable customers during the third quarter, contributing to a year-to-year increase of approximately 2.3% compared to the pro forma customer level of 6,178,800 at September 30, 1999. Year-to-date, the company has added 124,600 new basic customers, an annualized organic growth rate of 2.7%. At September 30, 2000, Charter served 6,318,300 basic cable customers. For "same-store" cable systems owned by Charter during the third quarter of both 2000 and 1999, revenues and system operating cash flow grew 12.8% and 19.5%, respectively. These systems represented 2,671,000 customers at September 30, 2000, reflecting a 2.3% growth rate in basic customers compared to a year ago. "I'm very proud to report these outstanding operating results which clearly show that the Charter management team has seamlessly integrated all of our acquisitions. We're in an excellent position to achieve all of our stated goals for the year, enabling us to be an industry leader in overall financial performance," said Jerry Kent, President and CEO. "I'm especially pleased with our basic customer growth, and consumer acceptance of our advanced video and -MORE-
2 CHARTER, FIRST ADD data services, including Charter Digital Cable(TM) and CharterPipeline(TM)." REBUILD AND UPGRADE OF INFRASTRUCTURE ALREADY PAYING DIVIDENDS Mr. Kent said Charter remains on schedule in its $3.5 billion project to build what is recognized as one of the most robust broadband infrastructures in the industry. "By the end of this year, about 70% of our customers will be served by upgraded plant. And by the end of the year 2002, nearly 93% of our customers will be served by 750 megahertz plant or greater, providing full, two-way interactive capability," Mr. Kent added. The acceleration of Charter's infrastructure rebuild has allowed it to be more aggressive in the rollout of advanced services. "We began the year 2000 with about 155,000 digital customers. Original projections were to average 10,000 digital installations per week throughout the year," Mr. Kent said. "We revised that goal during the second quarter to 12,000 digital installations per week because our accelerated upgrade allowed us to be even more aggressive in our sales and marketing of digital cable." Mr. Kent said consumer response during the third quarter to Charter's innovative Digital Summer Sizzle promotion prompted still further upward revision to year-end digital projections. "In the third quarter alone, we added some 279,000 Charter Digital Cable customers, averaging 21,500 installations per week, bringing our total at September 30, 2000 to 653,800 customers. As a result, revised digital sales projections indicate we could end the year with more than 900,000 digital customers." Charter ended the quarter with 184,600 data customers, a 24% increase over the prior quarter. "Charter Pipeline installations averaged over 2,700 customers per week throughout the third quarter, about 200 more installations per week than we projected at the beginning of the year," Mr. Kent said. RECENT DEVELOPMENTS Charter launched video-on-demand (VOD) technology to about 167,000 homes in the Pasadena area of its Los Angeles Region in October, with planned rollout to 275,000 homes by year-end. "VOD accommodates the busy lifestyles of our customers by providing immediate/real-time selection of hundreds of Hollywood movies with full VCR functionality," Mr. Kent said. "With the ease of a remote control, they can stop, start, pause and replay their -MORE-
3 CHARTER, SECOND ADD selections over a 24 hour period from the comfort of their home, without a round trip to the video rental store." Charter already provides VOD technology to some 7,000 customers in the Greater Atlanta Area and plans additional launches throughout the year 2001. A joint venture with Motorola, Inc.'s Broadband Communications Sector, ReplayTV, Inc. and Vulcan Ventures Inc. to develop and integrate digital video recording (DVR) capabilities in advanced digital set-top terminals was also announced in October. Mr. Kent said the venture, code named Project DISCO, will initially focus on creating a set-top based DVR platform designed to store video, audio and Internet content, creating a more robust platform for future services and allowing new applications to reside on the advanced digital set-top terminal. "It's our goal for Project DISCO to be to the digital platform what the VCR is to analog television," Mr. Kent said. Charter recently issued $650 million of Convertible Senior Notes due 2005. The company also plans to sell an additional $100 million of Notes on November 3, 2000, pursuant to an option granted to the initial purchasers of the Notes. Mr. Kent said, "I sincerely appreciate all the support and enthusiastic response from the investors in allowing us to upsize a $450 million offering to $750 million. This is further validation that the market recognizes we are executing across all aspects of our business." Mr. Kent said the net proceeds of the Notes were and will be used to repay a portion of amounts outstanding under a $1 billion bridge loan. LOOKING AHEAD Mr. Kent said operating cash flow growth for the fourth quarter of 2000 is expected to exceed the third quarter growth rate. He said the company expects to end the year with over 900,000 digital cable customers and approximately 225,000 data customers. With 6.3 million customers, Charter Communications, a Wired World company(TM), is among the nation's largest broadband communications companies. Charter offers an array of advanced broadband services including digital video programming services under the Charter Digital Cable(TM) brand; and high-speed Internet access via Charter Pipeline(TM). Charter's Class A common stock is traded on the Nasdaq National Market under the ticker symbol "CHTR." More information about Charter can be found on the Internet at www.chartercom.com. # # # -MORE-
4 CHARTER, THIRD ADD Detailed financial information is included in the attached addendum. Charter will conduct a conference call to discuss their operating results on Thursday, November 2, 2000, at 11:00 AM Eastern Time. The call will be available live via webcast {www.chartercom.com}. The call will be available on the "Investor" portion of the website, via "About Charter." Participants should go to the call link at least 10 minutes prior to the start time to register. The call will be archived on the website. Statements in this press release regarding Charter Communications' business that are not historical facts may be "forward-looking statements." These forward-looking statements include specific projections regarding Charter's operating cash flow in the fourth quarter of 2000 as well as projections regarding growth in digital cable and high-speed Internet subscribers and expected launches of VOD service. Forward-looking statements are inherently subject to risks, uncertainties and assumptions. Important factors that could cause actual results to differ materially from any such forward-looking statements are identified in the reports and documents Charter files from time to time with the U.S. Securities and Exchange Commission. CONTACTS: MEDIA ANALYST Anita Lamont, 314-543-2215 Mary Jo Moehle, 314-543-2397 alamont@chartercom.com mmoehle@chartercom.com
5 CHARTER COMMUNICATIONS, INC. CONSOLIDATED OPERATING RESULTS (DOLLARS IN THOUSANDS) THREE MONTHS ENDED SEPTEMBER 30 -------------------------------------- PRO FORMA(a) PRO FORMA(b) 2000 1999 % CHANGE ----------------- ----------------- ------------- (UNAUDITED) REVENUES: Basic $ 577,235 $ 537,341 Premium 58,108 59,957 Pay-per-view 5,896 11,116 Digital 25,581 1,372 Data services 15,455 4,564 Advertising sales 53,235 40,053 Other 107,371 85,687 ----------------- ----------------- Total revenues 842,881 740,090 13.9% ----------------- ----------------- OPERATING EXPENSES: Programming 182,005 165,782 General and administrative 145,208 128,104 Service 50,654 46,808 Marketing 16,356 17,949 Other 33,877 17,175 Corporate expense charge - related party 14,151 31,040 ----------------- ----------------- Total operating expenses 442,251 406,858 8.7% ----------------- ----------------- Operating cash flow $ 400,630 $ 333,232 20.2% ================= ================= (a) The pro forma results for the three months ended September 30, 2000 reflect the acquisition of Cablevision of Michigan, Inc. (Kalamazoo) in September 2000. (b) The pro forma results for the three months ended September 30, 1999 reflect: the eleven acquisitions of cable systems completed during 1999, and all acquisitions closed through September 30, 2000, including the Bresnan and Kalamazoo acquisitions. ADDENDUM TO CHARTER COMMUNICATIONS THIRD QUARTER 2000 EARNINGS RELEASE PAGE 1 OF 5
6 CHARTER COMMUNICATIONS, INC. SUMMARY OF OPERATING STATISTICS CABLE TELEVISION ACTUAL PRO FORMA(a) ACTUAL - ---------------- ----------------------- ---------------------- --------------------- SEPTEMBER 30, DECEMBER 31, SEPTEMBER 30, 2000 1999 1999 ----------------------- ---------------------- --------------------- Homes Passed 10,160,200 9,970,000 5,540,700 Basic Customers 6,318,300 6,193,700 3,425,700 Basic Penetration 62.2% 62.1% 61.8% Premium Subscriptions 4,426,200 3,144,500 2,039,000 Premium Penetration 70.1% 50.8% 59.5% Average Monthly Revenue per Basic Customer (quarter) $ 44.26 $ 41.13 $ 36.60 - ------------------------------------------------------------------------------------------------------------------------------------ DIGITAL VIDEO ACTUAL PRO FORMA(a) ACTUAL - ------------- ----------------------- ---------------------- --------------------- SEPTEMBER 30, DECEMBER 31, SEPTEMBER 30, 2000 1999 1999 ----------------------- ---------------------- --------------------- Digital Homes Passed 7,568,000 4,675,000 897,600 Customers 653,800 155,400 28,600 Penetration 8.6% 3.3% 3.2% Digital Converters Deployed 807,900 176,600 35,300 - ------------------------------------------------------------------------------------------------------------------------------------ DATA SERVICES ACTUAL PRO FORMA(a) ACTUAL - ------------- ----------------------- ---------------------- --------------------- SEPTEMBER 30, DECEMBER 31, SEPTEMBER 30, 2000 1999 1999 ----------------------- ---------------------- --------------------- Data Homes Passed 4,580,400 4,422,000 2,589,000 Customers 184,600 84,400 21,900 Penetration 4.0% 1.9% 0.8% - ------------------------------------------------------------------------------------------------------------------------------------ TELEVISION-BASED INTERNET ACCESS ACTUAL PRO FORMA(a) ACTUAL - -------------------------------- ----------------------- ---------------------- --------------------- SEPTEMBER 30, DECEMBER 31, SEPTEMBER 30, 2000 1999 1999 ----------------------- ---------------------- --------------------- Television-Based Internet Homes Passed 463,700 429,000 429,000 Customers 10,100 7,100 6,200 Penetration 2.2% 1.7% 1.4% - ------------------------------------------------------------------------------------------------------------------------------------ OTHER STATISTICS ACTUAL PRO FORMA(a) ACTUAL - ---------------- ----------------------- ---------------------- --------------------- SEPTEMBER 30, DECEMBER 31, SEPTEMBER 30, 2000 1999 1999 ----------------------- ---------------------- --------------------- For the quarter ended Capital Expenditures (in 000's) $ 790,899 $ 429,474 $ 179,851 As of Book Value per Share $ 11.42 $ 13.90 N/A - ------------------------------------------------------------------------------------------------------------------------------------ (a) The pro forma statistics as of and for the quarter ended December 31, 1999 reflect all acquisitions closed since this date, including Bresnan Communications and Kalamazoo. ADDENDUM TO CHARTER COMMUNICATIONS THIRD QUARTER 2000 EARNINGS RELEASE PAGE 2 OF 5
7 CHARTER COMMUNICATIONS, INC. CONSOLIDATED STATEMENT OF OPERATIONS (IN THOUSANDS, EXCEPT PER SHARE DATA) PERIODS ENDED SEPTEMBER 30, 2000 ---------------------------------------- THREE MONTHS NINE MONTHS -------------------- ------------------- (UNAUDITED) REVENUES: Basic $ 574,348 $ 1,668,092 Premium 57,465 171,432 Pay-per-view 5,848 21,875 Digital 25,581 49,843 Data services 15,455 42,676 Advertising sales 53,060 128,132 Other 107,204 273,295 ------------------ ---------------- Total revenues 838,961 2,355,345 ------------------ ---------------- OPERATING EXPENSES: Programming 180,919 527,379 General and administrative 144,969 404,478 Service 49,900 143,585 Marketing 16,356 45,693 Other 33,877 83,199 Corporate expense charge - related party 14,055 41,570 ------------------ ---------------- Total operating expenses 440,076 1,245,904 ------------------ ---------------- Operating cash flow 398,885 1,109,441 Depreciation 312,884 862,672 Amortization 315,222 915,221 Option compensation expense 8,116 34,205 Interest, net 282,676 758,608 Other, net 3,451 5,955 ------------------ ---------------- (523,464) (1,467,220) Minority Interest in Loss of Subsidiary 313,446 879,667 ------------------ ---------------- Net Loss $ (210,018) $ (587,553) ================== ================ Basic and Diluted Loss per Share $ (0.93) $ (2.63) ================== ================ Weighted Average Common Shares Outstanding 224,965 222,998 ================== ================ ADDENDUM TO CHARTER COMMUNICATIONS THIRD QUARTER 2000 EARNINGS RELEASE PAGE 3 OF 5
8 CHARTER COMMUNICATIONS, INC. CONSOLIDATED BALANCE SHEETS (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA) ACTUAL SEPTEMBER 30, 2000 ------------------ (UNAUDITED) ASSETS Current Assets: Cash and cash equivalents $ 44,467 Accounts receivable, less allowance for doubtful accounts 162,346 Receivable from related party 4,599 Prepaid expenses and other 43,755 ------------- Total current assets 255,167 ------------- Investment in Cable Properties: Property, plant and equipment, net of accumulated depreciation of $909,147 4,681,483 Franchises, net of accumulated amortization of $1,560,235 17,273,858 ------------- Total investment in cable properties 21,955,341 Other Assets 229,935 ------------- $ 22,440,443 ============= LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities: Accounts payable and accrued expenses $ 1,184,476 ------------- Total current liabilities 1,184,476 ------------- Long-Term Debt 12,167,729 ------------- Deferred Management Fees - Related Party 13,751 ------------- Other Long-Term Liabilities 173,232 ------------- Minority Interest 4,385,448 ------------- Redeemable Securities 1,846,176 ------------- Shareholders' Equity: Class A common stock; $.001 par value; 1.75 billion shares authorized; 233,685,768 shares issued and outstanding 207 Class B common stock; $.001 par value; 750 million shares authorized; 50,000 shares issued and outstanding - Preferred stock; $.001 par value; 250 million shares authorized; no shares issued and outstanding - Additional paid-in capital 3,322,261 Accumulated deficit (653,784) Accumulated other comprehensive income 947 ------------- Total shareholders' equity 2,669,631 ------------- $ 22,440,443 ============= ADDENDUM TO CHARTER COMMUNICATIONS THIRD QUARTER 2000 EARNINGS RELEASE PAGE 4 OF 5
9 CHARTER COMMUNICATIONS, INC. "SAME STORE" RESULTS (DOLLARS IN THOUSANDS, EXCEPT PER BASIC CUSTOMER DATA) OPERATING RESULTS THREE MONTHS ENDED SEPTEMBER 30 ------------------------------------------------- 2000 1999 % CHANGE ----------------------- ----------------------- ------------- (UNAUDITED) REVENUES: Basic $ 248,690 $ 231,135 Premium 28,162 29,765 Pay-per-view 3,356 7,697 Digital 14,018 1,134 Data services 7,215 1,814 Other 71,111 58,618 ----------------------- ----------------------- Total revenues 372,552 330,163 12.8% ----------------------- ----------------------- Operating Expenses: Programming 78,284 75,855 General and administrative 64,378 56,687 Service 20,216 22,076 Marketing 5,338 8,623 Other 14,092 7,728 ----------------------- ----------------------- Total operating expenses 182,308 170,969 6.6% ----------------------- ----------------------- System operating cash flow $ 190,244 $ 159,194 19.5% ======================= ======================= OPERATING DATA SEPTEMBER 30, 2000 SEPTEMBER 30, 1999 ----------------------- ----------------------- (UNAUDITED) Homes Passed 4,538,500 4,514,400 Basic Customers 2,671,000 2,611,400 2.3% Basic Penetration 58.9% 57.8% Premium Subscriptions 2,125,100 1,653,100 Digital Video Customers 332,600 28,600 Data Customers 54,100 21,400 Average Monthly Revenue per Basic Customer $ 46.49 $ 42.14 10.3% Note: The above "same store" information presents operating results and data for the third quarter of 2000 as compared to the third quarter of 1999 for the cable systems owned by Charter Communications as of July 1, 1999. ADDENDUM TO CHARTER COMMUNICATIONS THIRD QUARTER 2000 EARNINGS RELEASE PAGE 5 OF 5